A big fight over small business tax breaks

As the November election draws near, the White House and congressional Democrats are aggressively pushing a package of small business incentives designed to spur U.S. economic growth and a Democratic political revival.

The Small Business Jobs and Credit Act, which is before the Senate, is being touted by leading Democrats as a job-creating catalyst for the country. It would give $30 billion to local banks for small businesses, provide tax breaks and encourage investment in start-ups. It passed the House in June.

President Obama is pushing for small business tax relief. (AP photo)

Small Business Administrator Karen Mills said the legislation would create jobs across the country and almost immediately will benefit almost 1,000 businesses.

“It is something that is not going to cost the taxpayers anything,” Mills said. “It does what we need right now, which is to give more small businesses more help.”

Most congressional Republicans vehemently oppose the plan they call a desperate pre-election ploy that won’t spur consumer demand or loosen credit. Rep. Kevin Brady, R-Texas, says the bill isn’t the kind of help small businesses want.

“One thing that’s telling is that all through August and September, I’ve not had a single small business ask me to support this, not a single chamber of commerce,” said Brady, who ran a local chamber of commerce before his election to Congress.

Democrats are hoping that the measure will split the GOP from its business constituency and provide a pre-election legislative victory for President Barack Obama. But Mark Rom, an associate professor of government and public policy at Georgetown University, said Republicans are willing to risk a bit of political friction in order to deny Obama a political win.

“The Republicans would much rather oppose anything coming out of the Democratic Congress and take their chance in the election,” he said. “They will say that things will be better when they are in control.”

Gary Burtless, a senior fellow in economic studies at The Brookings Institution, said it’s easy for politicians to proclaim their support for small businesses, but actually putting something in place that spurs their growth can be tricky.

“It doesn’t hurt any politician to say whether they believe all these things, whether they know them to be true,” he said.